Becker Bill Targets Utility Profits, Links Executive Pay to Controlling Electricity Costs
Sacramento, CA — Senator Josh Becker (D-Menlo Park) today announced new legislation designed to strengthen accountability for investor-owned utilities, align executive incentives with the interests of ratepayers, and identify cost savings across California’s electric system. SB 905 proposes several reforms intended to control the growth of electricity costs while ensuring utilities deliver reliable service and responsible investment in the state’s energy infrastructure.
“Californians are paying more for electricity every year, and we need to make sure our policies are driving efficiency, transparency, and accountability in how those dollars are spent,” said Senator Becker. “This bill focuses on controlling costs, strengthening oversight, and making sure utilities are rewarded for delivering results — not simply for spending more.”
Key provisions of the bill include:
- Reducing Excess Utility Returns on Lower-Risk Investments
The bill directs regulators to consider lower authorized returns for certain categories of investments that reduce risk for utility shareholders. For example, undergrounding power lines can significantly reduce wildfire liability exposure for utilities while also improving system safety for customers. Because these investments benefit shareholders by lowering risk, shareholders should require a lower profit margin, saving ratepayers money.
- Aligning Executive Compensation with Cost Control
To better align incentives, the bill requires electric utilities to link a portion of executive compensation to keeping electricity rates from rising faster than inflation over a rolling three-year period. By tying compensation to performance, the measure encourages leadership decisions that prioritize cost discipline and responsible system management.
- Strengthening Performance Accountability
The legislation directs the California Public Utilities Commission (CPUC) to establish clear performance metrics for utilities, including reliability, system utilization, greenhouse gas reductions, and the speed of connecting new customers and clean energy resources. This will make clear what our expectations are for good performance from our utilities and hold them accountable for delivering safe, reliable, clean, and affordable power.
- Maximizing Use of Existing Grid Infrastructure
The bill also requires additional reporting on how effectively utilities are using existing distribution grid capacity, particularly during off-peak periods. Improving utilization of infrastructure that ratepayers have already funded can reduce the need for expensive new investments.
- Reducing Pressure on Electricity Bills
The measure builds on previous work to allow certain public purpose programs and wildfire-related costs to be funded through sources other than electricity bills, helping shift some costs away from ratepayers.
- Exploring Lower-Cost Financing Options
Finally, the bill directs the CPUC to evaluate alternative financing approaches for electric infrastructure investments, including options that could reduce borrowing costs and lower long-term costs for customers.
The legislation builds on Senator Becker’s previous work to control electricity costs and improve grid planning, including SB 254, which expanded tools for financing transmission infrastructure at lower cost to ratepayers.
“As California continues its transition to a cleaner energy system, we must ensure that investments are made efficiently and transparently,” Becker said. “This legislation is about getting more value out of the infrastructure we already have, holding utilities accountable for performance, and ensuring that every dollar spent delivers real benefits for Californians.”
“California utility customers are dealing with a crisis of affordability due to unprecedented increases in electricity rates driven by excessive utility spending and outsized profits,” said Matthew Freedman, Staff Attorney for The Utility Reform Network. “SB 905 would force greater performance accountability by the utilities, reign in excessive profiteering, and prioritize lowest-cost strategies for improving and operating the electrical grid."
“We’re in the middle of a real affordability crisis, and skyrocketing electricity bills are making it harder for families to get by,” said Shannon Olivieri Hovis, Chief Strategy Officer at California Environmental Voters. “This bill takes important steps to bring greater accountability and cost control to the way our electric system is managed. When utility bills keep climbing, working families are forced into impossible choices between keeping the lights on, paying rent, or buying groceries. Protecting Californians means tackling rising utility costs head-on.”
The bill is supported by The Utility Reform Network (TURN) and a large coalition of consumer, business, and environmental protection groups who are fed up with the high cost of electricity.